Government has reached an agreement with the BBC that it will take on the cost of providing free television licences for over-75s.

This will be phased in from 2018/19 with the BBC taking on the full costs from 2020/21.

Having inherited a challenging fiscal position, the Government is pleased that BBC has agreed to play its part in contributing to reductions in spending like much of the rest of the public sector, while at the same time further reducing its overall reliance on taxpayers.

As part of these new arrangements, the Government will ensure that the BBC can adapt to a changing media landscape.

Chancellor George Osborne said:

The BBC is a valued national institution that produces some of the finest television and radio in the world. But it is also a publicly-funded body, so it is right that it, like other parts of the public sector, should make savings.

The deal we have agreed with the Corporation means that it will take on the significant cost of TV licences for the over-75s, easing some of the pressure on taxpayers who have to meet the country’s welfare bill, while also ensuring that our promise to maintain pensioner benefits is met in full over the next five years.

The decisions the BBC and the Government have reached together will also secure its long-term future, with a funding model that is sustainable and can adapt in an age where technology is rapidly changing.

Secretary of State for Culture, Media and Sport, John Whittingdale MP, said:

The BBC is a world-class broadcaster and a cultural institution producing some of the best television and radio in the world. However as a publicly-funded institution, it also needs to make savings and contribute to what we need to do to get our country’s finances in order.

I welcome the BBC’s commitment in reaching this funding agreement, which is an important issue for its own future. I look forward to discussing the full range of issues over the course of the Charter Review period, and will be making an announcement about the process for the Review in due course.

The Government will bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV.

The Government will reduce the broadband ringfence to £80m in 2017/18, £20m in 2018/19, £10m in 2019/20 and £0m in 2020/21.

The Government anticipates that the licence fee will rise in line with CPI over the next Charter Review period, subject to: (a) the conclusions of the Charter Review, in relation to the purposes and scope of the BBC; and, (b) the BBC demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector.

The Government will consider carefully the case for decriminalisation in light of the Perry Report and the need for the BBC to be funded appropriately – no decision will be taken in advance of Charter Review.

The Government’s commitment that all households with an over-75 year old will be eligible to a free TV licence will be honoured throughout this Parliament.

Director-General of the BBC, Tony Hall, said:

We have secured the right deal for the BBC in difficult economic circumstances for the country. This agreement secures the long term funding for a strong BBC over the next Charter period. It means a commitment to increase the licence fee in line with inflation, subject to Charter Review, the end of the iPlayer loophole and the end of the broadband ringfence. In the circumstances, the BBC has agreed take on the costs for free licence fees for over-75s, and after the next parliament, will take on the policy.

The forthcoming Charter Review will provide an opportunity to consider wider issues relating to the purposes and scope of the BBC. Government will shortly confirm the process for Charter Review. It will be an open, robust and thorough process, in which the public and industry will be able to contribute their views on how the BBC should be set up for the future.

ENDS

Media enquiries – DCMS News and Communications team – 020 7211 2210 or out of hours on 07699 751153.

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